Nestling deep in the sun belt of the south, Austin is booming. The Texas state capital is light on regulation, light on tax and, according to Forbes magazine, one of the best cities in the US in which to do business. One of the titans of the new global economy - Dell computers - has its headquarters in the city.

It is this side of the Texan economy that George W Bush will be seeking to exploit in this his campaign.

He would like to convince voters that the whopping increases in real incomes enjoyed by workers in the computer sector are the result of his hands-off economic management of the state. Since he became governor, 1m new jobs and almost 50,000 new businesses have been created.

However, as with the US economy as a whole, there is another side to the story. Texas may be one of the handful of states not to levy its own income tax in addition to the federal income tax, but it has also seen a marked increase in inequality and poverty under Mr Bush.

In 1990 it was ranked by the census bureau as the eighth poorest state; the latest figures show that it is now the fifth poorest, with only Louisiana, Mississippi, New Mexico and West Virginia ranked lower.

Mr Bush's supporters argue that he has made a success of welfare-to-work policies; critics say that the emphasis on pushing people into low-paid jobs has left education and training neglected. Despite the presence of world-beating companies such as Dell, Texas produces fewer scientists and engineers than the average state, and ranks 48th in basic literacy.

One of Mr Bush's main policies in the election is his tax-cutting plan to help ordinary working families, working mothers and other low-income Americans.

The Democrats say that the governor's record in his home state has been one of failure, leaving low-income Texans worse off than working families in other states.

In 1998 Texas ranked 50th -last - in the union for women without health insurance and 43rd for women living in poverty. Almost 18% of Texan working parents had low earnings - defined as too meagre to lift a family of four out of poverty despite full time work - and Texas ranks third in the US in hunger.

The environmental impact of Mr Bush's economic policies are likely to become a campaign issue.

Houston has become the smog capital of the US, and the Republican presidential candidate has removed restrictions on development in Texas, opposes any curbs on trade in genetically modified food, and would completely repudiate the aims of the Kyoto climate agreement.